Catching up, “creating” jobs and coffee pods

June 2, 2015

I’m just back from a wonderful vacation in Italy, and spending this week at the Sustainable Brands conference in San Diego. To my surprise, I see that I haven’t posted here in more than a month. Lately, I’ve been writing more for my Nonprofit Chronicles blog, about how nonprofits and foundations can become more effective. If you’re interested, please subscribe to the blog or “like” my Facebook page, which is devoted to the world of NGOs. I’m hoping to play a small role in the growing Effective Altruism movement, which aims to “do good better.”

Meantime, Guardian Sustainable Business published two of my business stories in May. The first story profiles an impressive investment firm called Huntington Capital which aims to invest in companies that create good jobs in places that need them. Here’s how it begins:

At the heart of the American Dream – the idea that anyone in the US, by dint of hard work and determination, can climb the economic ladder – is the American dream job. This is, the kind of job that can become a career, the sort of work that provides employees with decent wages, benefits, training and opportunities to better themselves. It’s the type of job that underlays a thriving economy.

It’s the type of job that San Diego-based investment firm Huntington Capital is trying to encourage companies to create.

On the surface, Huntington looks like a fairly standard fund company. It manages three funds that have a total combined investment of about $210m, most of which comes from pension funds, banks, insurance companies, foundations and wealthy families. Huntington, in turn, has invested this money in about 50 companies since its launch in 2001.

…What sets Huntington apart is its commitment to have – in its words – “a positive impact on underserved businesses and their communities”. The company calls itself an impact investor, meaning that it aims to generate returns that are social or environmental, as well as financial. Rather than focusing on Silicon Valley startups, a fairly well-worn investment landscape, it helps finance established, small and medium-sized companies in California and the southwestern US. Most of its target companies sell goods and services to other businesses, like air filtration products, janitorial work and enterprise software.

I learned about Huntington after reading “Managing vs. Measuring Impact Investment,” an excellent story in the Stanford Social Innovation Review, by Morgan Simon, who co-leads Pi Investments, which invests in Huntington. She makes an important point–that creating jobs is not nearly as important as what kinds of jobs are created. Indeed, she goes so far as to argue that companies that create low-wage, no-benefit jobs actually make poverty worse because

“job creation” is a slippery concept: Outside of true innovation and demand generation, we can’t do much more than move jobs from one zip code to another. And even when jobs are created in a low-income community, if they are low paying, then by definition they are precisely what keep those communities locked into cycles of poverty.

How does that work? In general, we don’t just have a national unemployment problem; we have an employment problem, where more than two-thirds of children in poverty live in households where one or both parents work. The vast majority of these households are led by people of color, notably African Americans and Latinos who are twice as likely to be working poor.

…Rather than counting jobs, we were interested in the migration of low-quality jobs to high-quality jobs.